A view of the market from the ultimate vulture, Sam Zell

Sam Zell may be best known today for his controversial investment in troubled Tribune Co. But he's still a vulture real estate investor at heart  and an opinionated one at that.

He recently shared his thoughts at the Milken Institute Global Conference, an annual forum, held April 27 to 29 this year, in Los Angeles.

Speaking as part of a panel on "Commercial Real Estate: Identifying the Opportunities," Mr. Zell blamed the current crisis on excessive leverage.

"From 2003 to 2007, 50% of the institutional real estate in the U.S. traded. That 50% . . . ended up being overleveraged by virtue of the financing that was available at that time. Even historic all-cash buyers like Calpers . . . played the leverage game instead of just buying for cash. Today . . . there are very few 2003-to-2007 financings that are above water."

The availability of cheap capital artificially inflated prices, he added.

"The idea that a piece of land was worth $50 per buildable foot (at the beginning of the boom) and at the end it was worth, theoretically, $700 per buildable foot really brings into question the whole issue of valuation. Across the board, we all drank too much Kool-Aid, and we have an in-place structure today where financing is difficult . . . because the economics don't justify it."

He doubts U.S. commercial real estate will rebound soon. "If the owner has no equity, the real estate don't trade. Period. As long as the owner is underwater, which he is today, he's going to do everything and anything he can to stay in position in the hopes of being there when it recovers. It's going to be a couple, three years before the ownership structure changes as a result of foreclosure."